Question

1)

Key Company has a targeted sales volume of $62,300 units. Total fixed costs are $31,200. The contribution margin per unit is $1.20. What is targeted net income?

A.) $31,200

B.) $43,560

C.) $37,440

D.) $74,760

2)

________ is the relative proportions or combinations of quantities of different products that comprise total sales.
A) Sales mix
B) Constant mix

C) Fluctuating mix
D) Variable cost ratio

3)

The Todd Dolhun Company has the following information available:

Targeted after-tax net income =$120,000
Total fixed costs =$300,000
Contribution margin per unit =$2
Tax rate =40%
How many units should be sold to achieve the targeted after-tax net income?

A) 180,000

B) 210,000

C) 250,000

D) 300,000

4)

Activity-based costing systems should be adopted when ________.

A) indirect costs represent a small proportion of a product's total costs

B) indirect costs represent a large proportion of a product's total costs

C) a company makes one simple product

D) a company has a simple manufacturing process

Answer 1

1) Option B

Targeted net income = (62300*1.20)-31,200

= 43,560

2) Option A

Sales mix is a collection of all products and services that an organisation provides.

3) Option C

Sales needed = (300,000+120,000/60%) / 2

= 250,000

4) Option B

When a company has large indirect costs, ABC costing helps to apportion them effectively